Netflix-Comcast deal ends Internet consumption dispute

The landmark deal between Comcast and Netflix resolves a simmering dispute over who will support America's growing Internet video habit. Netflix has agreed to pay Comcast for a direct connection to the cable operator's broadband networks to ensure that Netflix customers receive an uninterrupted viewing experience when streaming movies and TV shows.

The agreement comes after Netflix customers complained about deteriorating service, as videos they tried to watch stuttered and stalled in midstream. The difficulties highlight the increasing problem of Internet network congestion. The nation's data lines were not designed with enough capacity to handle today's crush of traffic — particularly during peak hours. Experts for years have been warning about a looming online traffic jam. Netflix gobbles up about 30% of Internet traffic during evening hours, and that percentage is expected to swell as more people subscribe to the popular streaming service. The company is undergoing one of the fastest growth spurts in the industry, boasting more than 33 million subscribers in the U.S. -- a nearly threefold increase from four years ago. But video streaming quality had become a problem. To improve the quality of its streaming service, Netflix had been commissioning third parties, such as Cogent Communications, to deliver its video traffic across the Internet to Comcast and other Internet providers. But Netflix wanted to cut out the middleman and deal directly with Comcast.